Mexican voters take to the polls today to decide control of the country’s 500-seat Chamber of Deputies.
Today’s elections, the largest in Mexico’s history, are a bellwether of support for current President Andres Manuel Lopez Obrador, known as AMLO. The president’s party, Morena, and its partners are likely to maintain their simple majority. An absolute majority, however, remains more elusive, with the coalition expected to lose a handful of seats, likely bringing it just below the requisite 334.
A simple majority requires opposition cooperation. In this case, much of AMLO’s agenda will remain held up in Congress. In turn, the president will likely turn to referenda on key issues to bypass Congress, introducing political and regulatory uncertainty that could rattle markets.
Worrying investors, a Morena absolute majority would enable Lopez Obrador to push constitutional amendments aimed at rolling back the 2014 energy reform bill that stripped state-owned oil company Pemex of its monopoly status. Efforts to revoke private sector exploration and production contracts would harm investor confidence in Mexico, decreasing private investment in the oil and energy markets. Given its mounting debts and inefficient, outdated infrastructure, reliance on Pemex, without private sector collaboration, is unlikely to provide the financial windfall sought by Morena legislators to fund expanded social programs.
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Max is Foreign Brief's Chief Executive Officer. A Latin America specialist, Max is an expert in regional political and economic trends, focusing particularly on the Southern Cone.